The all-round layout of automotive electronic chip products, and the ecological construction of automotive electronic chip localization has begun to bear fruit: 1) Automotive electronic chips have initially completed the serialized and high-end product layout. Focusing on the development strategy of "standing tall in the sky" and "overwhelming", the company continues to break through the technical barriers of high-end products in automotive electronic MCUs, actively expands the market through the "MCU+" strategy, and has achieved serialized layout in 12 product lines. In the fields of automotive domain control, powertrain, drive-by-wire chassis, body and gateway control, Internet of Vehicles information security and airbag ignition chips, it has achieved mass production and installation. It is expected to break the international monopoly in the key areas of automotive electronics core chips, and realize independent and controllable technology and localized substitution. 2) Focusing on the industry's leading key customers, the company's influence in the mid-to-high-end automotive electronic chip industry in the domestic market has been significantly improved. The company's automotive electronic chips have successively entered BYD, Chery, Geely, SAIC, SAIC-GM, SAIC-GM-Wuling, Changan, Great Wall, FAW, Dongfeng, BAIC, Xiaopeng, Li and many other automobile manufacturers, and have been applied in batches on dozens of independent and joint venture brand vehicles.

New progress has been made in the field of quantum technology, and the future prospects are promising: the company actively carries out quantum technology cooperation, combines information innovation and information security chips with quantum technology, and realizes the iterative upgrading of information innovation and information security chips. The company has established a joint laboratory for quantum chips with Anhui Wentian Quantum Technology Co., Ltd., a well-known enterprise in the quantum field, and Hefei Silicon Zhen Chip Technology Co., Ltd., a shareholding company of the company. Based on the quantum true random number chip, the company actively develops the product series CQWNG10 of quantum security chips, quantum security TF cards, quantum security USB flash drives and cloud applications quantum security PCI-E password cards.

2024Q3 single-quarter revenue hit a new high, and expenses dragged down profit performance: The company achieved revenue of 470 million yuan in the first three quarters of 2024, a year-on-year increase of 17%, net profit attributable to the parent company of -130 million yuan, a year-on-year decrease of 122%, and net profit of -150 million yuan, a year-on-year decrease of 37%. Among them, the revenue in the 24Q3 quarter was 210 million yuan, an increase of 35% year-on-year and 151% month-on-month, and the net profit attributable to the parent company was -40 million yuan, down 105% year-on-year and 24% month-on-month. The company's high single-quarter revenue growth is driven by the growth of chip customization service revenue. The company's profit decline in the first three quarters was mainly due to: the company continued to increase the R&D layout of new products in order to seize the opportunity of localization and substitution of independent chips such as automotive electronic chips, and the growth of R&D expenses and sales expenses.

Profit forecast and investment rating: In view of the company's continuous increase in R&D investment in order to seize market opportunities in the past two years, which will affect the company's profits in the short term, we have adjusted the company's net profit forecast for 2024-2025 to -1.5/-30 million yuan (the previous forecast value was 1.3/190 million yuan), and the new net profit attributable to the parent company in 2026 is forecast to be 40 million yuan. Based on this, the "Buy" rating is maintained.

Risk warning: the risk that the progress of new product research and development is not as expected; the risk that new products will not be delivered as quickly as expected; Downstream demand is less than expected risk